CHAPTER ONE

                                                     INTRODUCTION

Background of Study

Ensuring long term organizational performance is a challenge in our present technology driven and competitive business world. For Small and Medium Enterprises (SMEs), the capability to put in place appropriate marketing practices has long been deemed a key strategic differentiator and means of achieving high and sustained performance and leverage over competitors. Marketing, a matrix of business activities organized to plan, produce, price, promote, distribute goods, services and ideas for the satisfaction of relevant need is important for the success of any organization whether service or product oriented. It is the pivotal part of any business that provides essential inputs to the firm‘s overall strategies and is central to success in today‘s fast moving competitive markets just as measuring marketing‘s performance is critical to managing it effectively. It can also be seen as a bridge that all businesses need cross by practicing it appropriately if they must improve their performance, remain relevant and effectively take care of co-opetitions (Masato & Troilo, 2015, Zaefarian, 2014).

When the principles of Marketing are consistent, appropriate and feasibly carried out in a sustained period of time, they are referred to as marketing practices. For Such practices to be effective, they must adopt and utilize philosophies, strategies and activities associated with the marketing concept capable of winning co-opetition and enhancing high performance. They must also represent a broad range of practices based on marketing principles. Ghouri, Khan, Malik and Razzaq, (2011), and Zaefarian, (2014) have suggested that sound and appropriate marketing practices are an important contributor to business performance.

EM practices are associated with marketing activities of firms like SMEs which are small and resource constrained, making such firms to rely on creative and often unsophisticated marketing tactics that make heavy use of personal networks (Naelati, & SobrotulImti, 2014). This implies that EM practices are an integrative process designed to innovatively apply the collective knowledge, skills, and resources of the firm to market related needs of the business to enable the business add value to its goods and services and meet competitive demands. As opined by Itodo, (2015) EM practices must in addition involve a process by which firms derive strategies to enable them anticipate and respond innovatively to the dynamic business environment, adding that such efforts inevitably improve the competitiveness of business firms and eventually their performances.

EM practices have been identified as one of the most important key ingredients for superior performance and global competitiveness in SMEs (Junde, 2014). Firm performance (the strategic outcomes that organizations use to realize its goals) has therefore been established as a focal phenomenon in business studies. SMEs performance is therefore a complex and multidimensional phenomenon that has been established to directly depend on efficient marketing practices. Enhancing business performance through appropriate marketing practices is of increasing interest to all businesses (Kelson, 2014). The success or non performance of SMEs rests in part on the nature and types of marketing practices they put in place for their businesses (Ediri, 2014).

Performance, considered to be a subset of the broader concept of organizational success is a fundamental feature for survival and sustainability as performance factors like appropriate entrepreneurial marketing practices have been found to spur business expansion, sales growth, customer satisfaction and return on investment in all classes of SMEs (Itodo, 2015). Prior research efforts (Eniola & Entebang, 2015) suggest that sound marketing practices are an important contributor to performance in business. To this end, Taiwo (2010) conclude that marketing practices have a significant impact on performance variables as they interact with different components to facilitate performance. It is therefore clear that there is a strong correlation between marketing practices and SMEs performance.

Achieving accelerated performance in SMEs demands their marketing practices to be entrepreneurially and properly carried out and correctly implemented at the right time and in the right proportion (Kinyua, 2014). Besides, the modern day competitive environment demands the successful implementation of marketing practices if a firm is to achieve an appreciable 4 performance in its chosen market segment. Firm performance has been established to directly depend on efficient marketing practices (Naelati, and SobrotulImti, 2014). Studies relating to both large firms and Small and Medium Enterprises (SMEs) .constantly emphasize a positive relationship between business practices, management activities and performance, as it is often articulated that best business practices produce superlative business performance (Arsalan, Naveed & Muhammad 2011).

Small and Medium-sized Enterprises (SMEs) are a wide variety and heterogeneous group of enterprises and a very important business segment that provides national socioeconomic development both for developed and developing markets and economies. They embody diverse kinds of sophistication, skills, capital, growth orientation and are found in both formal and informal sectors (Eniola, 2015). They may be owned by individuals, groups, corporate organizations and government and their owners may or may not be poor (Naelati, and SobrotulImti, 2014). These classes of enterprises are found in a wide variety of industries and operate in very different markets (rural, urban, local, national, and international) and social environments (Ediri, 2014) and are drivers of economic growth as they contribute greatly to economic development of both developed and developing nations in diverse ways including reducing unemployment (among many others) even though they are usually characterized by lack of adequate resources, owner/manager operation, flexibility and low-tech involvement (Shehu, 2014).

The importance of small and medium enterprises to the socio-economic development of low and middle-income economies is well documented (OECD, 2009 and DCCI, 2011). SMEs represent a frequently researched area because of their significant economic weight, flexibility, innovation and their fast decision-making (Junde, 2014). Because of their unique role in economic development of nations, SMEs are globally regarded as instruments of change and a pivot of economic catalysts in almost all economies of the world. They are also important movers in the process of structural changes in both developed and developing markets and economies (Szirmai, Naude & Goedhuys 2011) and are significant to the local entrepreneurship, innovative activities and are able to exploit opportunities (UAE, 2012).

In Nigeria, Small and Medium-scale Enterprises (SMEs) which came into the mainstream of the country‘s economic activities in the 60‘s owing to its obvious vital contributions plays a very important role in the process of industrialization and sustainable economic growth (Ocheni, 2015). Like in the developed countries, SMEs in the country have enabled entrepreneurship activities through which employments are constantly generated and poverty is reduced and sustainable livelihood achieved (Ogunmokun, Li & Ling-yee, 2014). These classes of enterprises make up about 97% of businesses in Nigeria and provide on average 50% of Nigeria‘s employment and its industrial output (Ocheni, 2015). Government and development experts have therefore realized the fact that SMEs possess the needed catalyst to turn the economy around for good (Tubastive & sobrotullmtikhanah, 2014). However, for SMEs to effectively and continuously carry out their roles as enumerated above, they must continually perform effectively. The use of appropriate marketing practices can fuel firm performance in Small and Medium Enterprises (Eniola, 2015). Marketing practices serve as a link between organizations, their customers and various processes within the firm (Dzisu & Ofosu, 2014). Ghouri et al (2011) point out that carrying out proper marketing practices adds excellence to firm‘s activities and strengthens the competiveness and market share of the firm while Arsalan et.al. (2011) believes that putting in place marketing practices is a necessity for every business since performance of firms has been established to directly depend on appropriate marketing practices. The above submissions clearly attest to the fact that appropriate entrepreneurial marketing practices can have positive effect on SMEs performance. It is however, unfortunate that SMEs performance have fallen short of expectations in Nigeria (Osotimehin, Jegede & Akinlabi, 2012) as the country is still characterised with alarming unemployment rate of 19.7% (National Bureau of Statistics, 2010) and high level of poverty as 7 more than half of the population still live below the poverty line (Ediri, 2014). This shows that despite their contributions to economic development of many nations, Small and Medium- Scale Enterprises in Nigeria are still not very effective in their performance. Most SMEs in the country die shortly after their establishment and the few that survive follow suit soon after the ageing or physical incapacitation or death of their owners (Ediri, 2014). The failure rate of small business stands around 50 percent in Africa as 50% of new entrepreneurial ventures disappear within the first five years after their establishment in USA and probably that of Nigeria is higher (Inalegwu, 2014).. It is based on the above background that this study is put in place to assess the effect of entrepreneurial marketing practices on the performance of SMEs in Lagos metropolis of Benue state. Since marketing is concerned with the creation of customer (which should be the valid basis for the existence of any business organization), it is important that the marketing practice of the organizations that dominate in all economies of the country should be investigated and understood so as to improve on the practice.

1.2 STATEMENT OF PROBLEM

The contributions of SMEs in economic development of both developed and developing nations have always been acknowledged (Aliyu & Mahmood 2014 and Junde, 2014). But as Ediri (2014) opines, SMEs can only maintain such a position when a good number of strategies including the formulation and application of appropriate entrepreneurial marketing practices are put in place at the right time and in the right proportion to exert positive effect on performance. Most studies on the relationship between entrepreneurial marketing practices and small business performance have always focused on large firms in developed markets and economies (Salavou, Baltas and Lioukas 2004) as well as in the Middle East and North Africa (Dutta 2006). Though few of them are conducted in Nigeria (Mba and Emerti, 2014), none is conducted in the study area. This study therefore fills the gap. Besides, similar studies may not have the same framework, similar EM practices and performance variables. Whereas findings of many studies such as Shehu and Mahmood, (2014) on the relationship between EM practices and SMEs performance in Nigeria appear to be mixed, some studies among them Aliyu, (2014) found a positive association between EM practices and SMEs performance. However, Oyedijo, (2012),

The marketing practice of SMEs is usually assumed despite the fact that SMEs are an important factor in the successful existence of any economy and that they dominate the landscape of all economies, from developed to developing and underdeveloped. Since marketing is concerned with the creation of customer, it should be the basis for the existence of any business organization. It is important that the effects of marketing practices on the performance of these 9 classes of enterprises that dominate economies of the world should be investigated and understood so as to be able to improve on them.

Most writers on SMEs in Nigeria have not given the marketing practices of these classes of organizations the necessary focus as their writings have always centered on the principles that should be adopted at the expense of the practice in place. As such the works of Oshamwoi (1983) and Udendeh (2006) placed emphasis on principles and expected procedures at the expense of marketing practices in SMEs. Entrepreneurial Marketing practices however differ from continent to continent, countries to countries, cities to cities and sector to sector in relation with social, cultural and economic backgrounds of every given area (Ghouri, Khan, Malik, and Razzaq, 2011). Even in the same company, different approaches of entrepreneurial marketing practices are used in different dimensions and phases of the company’s life (Gummesson, Kuusela & Narvanen 2014). The differentiation of entrepreneurial marketing among space, time and effectiveness of marketing practices could be the distinction for any firm or business in a particular environment (Kelson, 2014).

The academic research on Small and Medium Enterprises have mainly concentrated on the factors militating against the success of these classes of businesses. Only few of the studies concentrated on aspects related to marketing application (Mba & Emerti, 2014). Hills and Hultman, (2008) advocate for EM  research in all contexts. This study therefore positions itself with the objective of studying EM practices in SMEs to bridge this gap.

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to determine the effect of entrepreneurial marketing practices on performance of small and medium scale enterprises in Lagos metropolis of Lagos state. The study seeks specifically to:

1.To determine the effect of customer relationship management on the performance of SMEs in Lagos Metropolis.

2.To  ascertain the effect of market segmentation on the performance of SMEs in Lagos Metropolis.

 3.To assess how co-opetition affect the performance of SMEs in Lagos Metropolis.

4.To evaluate the effect of Quality on the performance of SMEs in Lagos Metropolis.

5.To establish the nature of effect that Promotion has on the performance of SMEs in Lagos Metropolis.

1.4 RESEARCH QUESTION

 This study focused on the effect of Entrepreneurial Marketing (EM) Practices on performance of Small and Medium Scale Enterprises (SMEs) in  Lagos  Metropolis of Lagos State, Nigeria. Accordingly, the following specific research questions are posited:

1. To what extent does Customer Relationship Management (CRM) affect the performance of SMEs in Lagos Metropolis?

2. To what extent does Market Segmentation affect the performance of SMEs in Lagos Metropolis?

 3. To what extent does co-opetition affect the performance of SMEs in Lagos Metropolis?

 4. To what extent does Quality affect the performance of SMEs in Lagos Metropolis?

 5. To what extent does marketing promotion affect the performance of SMEs in Lagos Metropolis?

1.5 RESEARCH HYPOTHESES

 This research work was guided by the following hypotheses;

1. Hypotheses One (Ho1) Customer Relationship Management has no significant effect on the performance of SMEs in Lagos Metropolis.

2. Hypotheses Two (Ho2) Market segmentation has no significant effect on the performance of SMEs in Lagos Metropolis

3. Hypotheses Three (Ho3) Co-opetition has no significant effect on the performance of SMEs in Lagos Metropolis.

4. Hypotheses Four (Ho4) Quality has no significant effect on the performance of SMEs in Lagos metropolis.

5. Hypotheses Five (Ho5) Promotion has no significant effect on the performance of SMEs in Lagos metropolis.

1.6 SIGNIFICANCE OF THE STUDY

 This study is very significant. First, little or nothing is known about the effect of entrepreneurial marketing practices on the performance of SMEs in Lagos metropolis.

 It will offer a combination of academic contributions for scholars and researchers, managerial implications for policy makers and practical contributions for practitioners and operators.

 The knowledge to be gained from such a study will enable SMEs to understand and focus on implementing marketing practices that can lead their businesses to improved performance. Achieving this will contribute to the reduction of the high SME failure rates and increase SMEs long-term performance and survival.

The study is also very significant as its outcome will spell out the relevance of marketing and the correct marketing practices on the performance of small and medium enterprises.

 This will help SME regulatory agencies in knowing the kind of policies to propose and implement for SMEs.

The study will also help the relevant tiers of government (i.e. Federal, state and local) in terms of SMEs performance in their areas.

 The study is conducted in Nigeria which will enable the study instruments to be further tested in other parts of the country and other African countries.

 Further, the suggestion for achieving successful business performance through appropriate EM practices as is reviewed by the research findings will be effectively communicated to policy makers and SMEs managers who will be expected to design suitable strategies and programs to address factors which are important in the achievement of successful relationship between entrepreneurial marketing practices and their effects on business and performance.

1.7 SCOPE OF STUDY

The scope of this study covers Small and Medium scale Enterprises in Nigeria. For numerous limiting factors, the study is confined to Lagos state, precisely lagos metropolis  in the southwestern geopolitical zone of the country. The study area covers a geographic area of 3,577 kilometers radius with a population of over 5000 SMEs (Lagos  State  Ministry of Commerce and Industries, 2018). The scope of the study variables for this study includes SMEs performance as the dependent variables made up of Return on Investment (ROI), Market share, Sales growth and Customer satisfaction, while entrepreneurial marketing practices, the independent variable, is proxied by Customer Relationship Management (CRM), market segmentation, Co-opetition, quality and marketing promotion variables. The choice of the study area is informed by the increasing growth of business activities in general and SMEs in particular in the  entire  Lagos  metropolis, Nigeria, which may be attributed to the emergence of the state as the food basket of the nation, the conducive and secured business environment in the area as well as the proximity of the area to the nation‘s federal capital, Abuja. Besides, the study area occupies a centrally located position in the country, has a large population and is cosmopolitan in nature.

LIMITATION OF STUDY

Cost of information collection (questionnaire distribution) was seen as a major challenge and limitation to this research.

Most SMEs where manage by uneducated persons, so there was a problem of getting accurate answers from these persons.

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